The global architecture industry earns over $359 billion annually. With the demand for various building design and construction services continuing to grow, now can be an opportune time to start your own architecture firm.
When beginning your own firm, you’ll need to consider critical steps like determining your legal business structure, establishing an office, acquiring the necessary licenses and insurance, investing in architecture software, hiring talented staff, and most importantly, attracting clients.
This guide will walk you through how to start an architecture firm. Topics include market research, registering an EIN, forming an LLC, obtaining business insurance, optimizing accounting, and more. Here’s everything to know about this rewarding entrepreneurial endeavor.
1. Conduct Architecture Firm Market Research
Market research is integral to starting your own business in the architecture industry. It offers insight into finding potential clients, sourcing materials, getting to know your target market, and other details needed for your own architecture company business plan.
Some details you’ll learn through market research on architectural firms include:
- Commercial building and healthcare projects will drive much of this growth as businesses expand facilities and medical centers upgrade real estate.
- Renovation design services also represent potential business, projected to constitute over 50% of construction spending over the next decade.
- With strict sustainability standards and goals to refurbish aging infrastructure, existing building upgrades will necessitate the involvement of architecture professionals.
- Firms that specialize in redesign and retrofitting have an especially strong opportunity to fill regional renovation needs.
- Focusing service offerings in defined architectural niches also allows newer practices to compete with large generalist firms.
- Developing expertise in areas like hospitality building design, multifamily housing, or commercial interiors can establish a firm’s reputation and referral network.
- The profession as a whole faces the challenge of a tight labor market, but this offers prospects to distinguish a firm’s culture.
- With nearly 1 job opening for every 1 architecture employee, retaining top talent through competitive compensation, workplace policies, and professional development incentives will be key.
While launching a profitable and thriving architecture firm requires substantial early financing and years of building a client base, the typical revenue per firm now exceeds $690,000, proving the industry can ultimately provide financial stability. The market outlook has room for new practices to find a niche and succeed.
2. Analyze the Competition
Understanding the competitive landscape is vital for launching a successful architecture practice. When assessing rivals, focus both on competing brick-and-mortar firms in your region and those with an online presence.
Some ways to get to know competitors as you open your architectural firm include:
- Identify architecture companies that promote services similar to your planned offerings.
- Research their years in business, clients, number of architects/employees, and projects.
- Drive by offices to evaluate location, signage, and parking as indicators of client traffic.
- Subscribe to industry associations to network and glean insights on peer firms.
- Online, search key phrases like “Chicago commercial architects” and scan related results.
- Compile a list of competitors ranked highly.
- Visit each website and social media to analyze services, marketed expertise, processes, and portfolios.
- Note stale or infrequent posting as possible opportunities.
- Use Alexa.com to gauge visitor traffic to competitive sites over time – higher and growing figures suggest more engagement.
- Install Google Analytics on your site to eventually compare.
- Sign up for Google Search Console to request inclusion in results for relevant searches.
Ongoing competitor analysis informs everything from your brand positioning to service rates. But most importantly, it allows adapting quickly to shifts in your regional market while differentiating your firm’s strengths.
3. Costs to Start an Architecture Firm Business
Embarking on opening an architecture practice brings extensive upfront investments before the business can even begin operating and billing clients. From licenses and equipment to office space and initial staff, starting an architecture firm requires capital to set the foundation.
- Registration and permits are around $2,500. Architecture practices must register legally in their state.
- Expect fees for forming an LLC or corporation ($500+), along with securing necessary state architecture permits ($200/individual) and municipal business licenses ($50+ annually).
- Small commercial office spaces average $25/sq ft in monthly rent, with 1,000 sq ft recommended for a practice with 2-5 employees – equating to roughly $30,000 per year.
- From high-performance computers and architecture software (Autodesk, Rhino) to printers, cameras, and supplies, key equipment to operate totals approximately $15,000. Ongoing software subscriptions can run $5,000 annually.
- General business liability insurance is non-negotiable, covering potential errors and injury claims. Expect to budget $5,000 per year.
- Estimating average annual salaries of $50-$80,000 per architect and $35,000 for admin, first-year staffing costs can easily surpass $200,000.
In total, the first-year investment to open doors likely falls between $250,000-$350,000 between fixed and recurring monthly costs.
On the ongoing side, maintaining salaried employees comprises the architecture firm’s highest regular expenditures. But further major line items like rent, software, equipment leases, insurance, advertising, and professional services need inclusion in yearly budgets.
- Workspace leasing costs continue, along with heating, electricity, and high-speed internet amounting to around 30% extra per month.
- Payroll consumes 50% or more of a service business’ operating costs. Employer taxes and benefits also add 25%+ onto salary amounts. Building the architect team is imperative to scaling client work, but affording skilled talent remains the largest financial hurdle.
- While computing hardware may last 3-5 years, ongoing software subscriptions for essential programs like AutoCAD or Revit push technology costs into five figures annually.
- Insurance can run $10,000 per year. Premiums often rise as the firm’s client capacity and payroll expands.
- Expect to spend $15,000 or more on ads. Architecture is still largely word-of-mouth referral-driven. Digital marketing, print ads in contractor directories, sponsoring industry events, and direct mail all play a role in lead generation amounting to around 5% of gross revenue.
Keeping expenses lean early allows firms time to incrementally grow client work and cash flows. Yet providing competitive wages that retain talented architects remains the largest, inescapable operating hurdle. Achieving consistent profitability necessitates securing a steady stream of billable client projects.
4. Form a Legal Business Entity
When establishing an architecture practice, selecting the right legal entity merits careful evaluation regarding liability protection, taxation, and long-term goals. While sole proprietorships offer simplicity for solo entrepreneurs, incorporating as an LLC or corporation better shields personal assets.
Opening a shop as a sole proprietor avoids complex registrations but leaves architects personally vulnerable to debts and lawsuits. Tax filings also remain entwined with the individual’s returns lacking corporate deductions. As the majority of firms rely on growing multi-person teams, sole proprietor limitations warrant evolving beyond this basic structure.
Partnering with fellow architects spreads liability exposure and may expand collective expertise. However, each partner assumes equal fiscal duties for expenses, creditors, and legal claims against just themselves or the partnership. Income passes directly to partners for tax payments too. Without limited protections, general partnerships give little advantage over sole proprietorships for architecture professionals.
Limited Liability Corporation (LLC)
For small service businesses like architecture practices, LLC status offers the best elements of pass-through taxation, limited liability, and operational flexibility to add partners. As the business itself possesses a distinct legal identity from owners, an architecture firm LLC shelters personal assets if sued. LLC income also bypasses corporate taxation, avoiding double payments.
Formal corporations ensure fully limited fiscal and legal liability given the separation of company finances from employee shareholders. However extra administrative filings, corporate taxes on earnings, and increased accounting formality can overwhelm small practices. Most architecture firms only incorporate once establishing sufficient recurring revenues over $500k/year.
5. Register Your Business For Taxes
Securing an Employer Identification Number (EIN) marks a crucial first step to formally register your architecture firm with state and federal agencies. The EIN serves as your business’s social security number used when opening bank accounts, paying taxes, and hiring employees.
While sole proprietors can operate using SSNs, establishing an architecture LLC or corporation necessitates getting an EIN. The Internal Revenue Service (IRS) issues EINs to business professionals for free and the online process takes under 15 minutes from start to finish:
- Navigate to the IRS EIN Assistant and select “View Additional Types” including Limited Liability Companies.
- Choose the appropriate applicant category for your architecture firm’s legal business structure.
- Provide basic information about your company and its responsible parties when prompted.
- Review your architecture firm’s details for accuracy then submit the EIN application.
- The assigned 9-digit EIN appears on the screen to save for your records.
In addition to the federal EIN, architecture firms must complete state-level licensing and tax compliance steps related to sales and payroll. Your Secretary of State website outlines prerequisites to legally conduct business based on your firm’s location and services.
While no fees apply for the EIN itself, individual state architecture practice registration, transaction taxes, and employer requirements do carry costs. Consult state and local governments to ensure full compliance wherever you practice to avoid penalties.
Proper legal and tax registrations establish credibility with clients while allowing architecture companies to hire employees. Taking the time upfront to formalize your business secures the ability to scale operations smoothly in the future.
6. Setup Your Accounting
Proper financial record-keeping provides the foundation for a thriving architecture business. From tracking deductible expenses to accurately billing clients for services, an organized approach to accounting lends major advantages. The right software and professional guidance facilitate smooth bookkeeping.
Rather than manual ledgers, architecture firms should utilize digital accounting systems like QuickBooks that seamlessly integrate with bank and credit card accounts. QuickBooks downloads transactions, generates financial reports, and even invoices clients automatically. The software subscription averages just $25 per month, easily offset by the hours saved on manual data entry.
Hire an Accountant
While quality software empowers accurate DIY accounting, the services of a dedicated bookkeeper or accountant still prove invaluable for architecture enterprises. Professional guidance nets expertise in setting up charts of accounts, depreciation, payroll tools, and QuickBooks customization specific to design practitioners.
Open a Business Bank Account
Even sole proprietor architecture practices should open dedicated business checking accounts and credit cards solely for company expenditures. This clearly distinguishes employee, rent, equipment, and materials costs from personal finances. Come tax time, properly categorized expenses readily qualify as write-offs alongside client income.
Apply for a Business Credit Card
Applying for a business credit card utilizes the architecture firm’s details including EIN rather than social security number and personal credit score. This facilitates higher limits and cards tailored towards common merchant categories like office supply retailers relevant to commercial enterprises.
7. Obtain Licenses and Permits
Before an architect starts practicing, all licensure and permits must be obtained. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
State Architecture Registration Each state oversees restrictions on offering professional architecture services based on an individual’s residency location, not where clients reside. Every architect owner or employee providing design work must apply for and carry an active architecture license issued by their state board. For example, Illinois policies differ distinctly from requirements in California or New York.
Candidates submit proof of completed education and experience prerequisites, then pass the Architect Registration Examination (ARE) to demonstrate sufficient standards of competency. State registration involves fees of around $200 initially and recurring biennial renewals. Architects display license numbers on documentation to confirm active status in good standing with state boards.
General Business Licenses Local municipalities like cities and counties also impose general business licensing systems applicable to architecture firms. Annual tax certificates purchased validate compliance with zoning ordinances while contributing revenue through modest fees.
Building & Construction Permits For architects undertaking hands-on construction or renovation projects on owned properties, acquiring permits remains mandatory before breaking ground. Local permit offices review proposals to ensure adherence to building codes, safety standards, and zoning regulations before approving requests and conducting site inspections at multiple project milestones.
8. Get Business Insurance
Given the client services nature of architecture, adequate insurance plays a pivotal role in safeguarding firms financially. Policies cover costly property damage, lawsuits, employee injuries, and more that threaten operations. Despite the regular premium expenses, insurance represents fundamental protection every practice must secure.
Without coverage, just a single incident could spell disaster for a small firm’s survival. Imagine facing any of the following scenarios uninsured:
- Construction Defect Lawsuit – Resulting building flaws prompt million-dollar claims.
- Server Theft – Burglars steal computers with client data and design IPs.
- Employee Injury – Architect breaks leg onsite needing surgery and work leave.
The astronomical costs underlying these common mishaps could sink firms instantly minus insurance buffers. Comprehensive policies also convey reputability with commercial clients, contractors, and partners.
Navigating Insurance Options The optimal insurance mix for architecture enterprises balances affordability with sufficient coverage scopes:
- Professional Liability – Shields against malpractice claims from client project losses earning 6 figures potentially.
- General Liability – Property/personal damage from onsite accidents and architecture firm negligence.
- Commercial Property – Protects leased office spaces and owned building assets.
- Workers’ Compensation – Mandated coverage for employee injuries/claims.
- Cyber Liability – Data breach response assistance.
- Business Owner’s Policy (BOP) – Bundles general liability, property, and loss of income.
Securing Coverage Independent agents represent multiple insurers, simplifying tailoring the ideal insurance portfolio. Expect to submit past financial records and risk details relevant to architecture. Costs vary based on revenue, payroll, office valuation and more averaging approximately $10,000 annually for robust protection.
9. Create an Office Space
Establishing a professional office lays the integral groundwork for architecture practices by providing client meeting capacity and efficient designer workspace. While home offices convey convenience for solos, location, and facilities factor greatly when staff expands.
Solo entrepreneur architects can minimize early overheads by launching firms from home studies. Deductible advances like drafting tables, computers, and high-speed internet setups cost under $5,000. However, focusing amidst family interruptions proves challenging. Nor can residences host client meetings adequately beyond video calls. As firms grow, home limitations warrant upgrades.
For small teams of 2-3 architects, co-working spaces like WeWork provide turnkey offices faster and cheaper than traditional leases. Modern desk spaces, conference rooms, printing/scanning amenities, and flexible lease terms maintain professionalism from $300+ monthly per architect. Yet inventory, sample, and equipment storage access restrictions persist.
Leasing full-floor office suites within business complexes best suits firms with 4+ architect employees. Expect commercial leases spanning 3-5 years for 1,000+ square foot spaces costing $30/square foot monthly inclusive of cam fees and parking availability. Benefits include a prominent regional presence and custom architectural interiors & interior design befitting design practitioners alongside scalability.
10. Source Your Equipment
Outfitting a practice with technology and supplies represents significant upfront outlays when equipping teams for architecture work. However, buying brand new items at full market prices hardly proves necessary with alternative rental sources and secondhand marketplaces available.
Direct retailers like Dell, HP, and Apple offer the newest computers and design hardware under warranty for maximum useful lifespans of around 3-5 years. Photography gear, printers, software, and accessories can also be sourced through B&H Photo or Adorama with steep education discounts.
Gently used equipment with years of utility remaining commonly sells on Craigslist and Facebook Marketplace at 50-80% discounts off original retail prices. Ex-corporate fleet laptops, pre-owned drafting tables, and showroom 3D printers offer immense value.
Longer-term rentals secure cutting-edge equipment without extreme upfront capital. National chains like Rent-A-Center offer flexible 12-36 month leasing or rent-to-own programs on anything from wide-format scanners and printers to the latest computers and tablets. Plans average around $100-200 monthly per high-demand item.
11. Establish Your Brand Assets
Beyond just designing buildings, architecture practices must architect their brands to stand out. A cohesive identity conveys professionalism and recognition vital for client procurement. From logos to websites, branding elements work cohesively attracting ideal projects.
Getting a Business Phone Line
Toll-free phone numbers supplied by modern voice-over-IP providers like RingCentral suit architecture firms much better than landlines. RingCentral systems offer call routing, voicemail transcriptions, and unlimited US calling plans starting at around $30 monthly. Branded phone numbers establish credibility and discoverability for sales calls.
Creating a Logo & Brand Guide
A thoughtfully crafted logo crystallizes an architecture practice’s visual identity, emotions, and reputation. Bold, memorable iconography like the imagery of famous buildings, structures, and cityscapes effectively represents design prowess. Logo maker Looka creates thousands of custom options incorporating input on preferred styles, colors, and symbols signatures to firms.
Printing Business Cards & Signage
Vistaprint offers affordable architecture business cards showcasing logos, taglines, names, phone numbers, emails, addresses, and social channels so contacts easily reach firms. Executing designs with finishes like foil stamping qualitatively signals design excellence. Expect 500 cards for under $50.
Securing a Domain Name
Purchasing a .com domain via registrars like Namecheap enables professionally owning namesake digital properties long-term for branding and emailing. Ideal architecture domains contain firm names, locations, and services. Securing domains early prevents competitors from acquiring URLs confusingly similar to companies.
Building a Tailored Website
Well-designed websites charmingly showcase project photography while detailing firm services and processes. Through website builder Wix, stunning sites compile seamlessly without coding. For more complex functionality, specialized architecture web developers abound on freelance marketplaces like Fiverr to execute bespoke designs around $1000-$5000 matching brand styles for enhanced qualified leads.
12. Join Associations and Groups
Beyond just designing buildings, architect entrepreneurs must strategically network locally and nationwide to prosper. Industry associations, trade events, and online communities all provide invaluable connections, insights, and services helping firms win clients and execute complex projects.
Joining regional chapters of prominent architecture associations like the American Institute of Architects (AIA) and the National Organization of Minority Architects (NOMA) lend access to specialized training programs, job boards, conferences, mentorships, and discounts on tools or insurance. Membership conveys credibility while surrounding firms with potential contractor partners and referral sources.
Event discovery platforms like Meetup catalog countless casual and professional architecture meetups happening monthly across all metro areas to mingle with area practitioners. Local continuing education events, speaking engagements, facility tours, and open houses also circulate there.
National architects Facebook Groups like Interior Designers and Architects Group USA and regional groups like California Architects & Consultants share job leads, industry news, software tips, and inspirational designs daily. Firms gain feedback critiquing works-in-progress. Participating in these massive idea exchanges with potential future partners around the globe.
13. How to Market an Architecture Firm Business
Implementing ongoing promotional initiatives proves fundamental for architecture firms aiming to continually secure new client projects as the lifeblood of operations. Word-of-mouth referrals from satisfied customers and partners serve as the most valuable source over time.
Leveraging existing happy clients provides the most conversion-focused channel for new sales through authentic testimonials. For example, offering modest referral bonuses for any project over $10,000 generates excitement to actively suggest preferred architects. Maintaining positive long-term relationships earns projects as previous customers expand real estate portfolios.
Digital channels present architecture brands 24/7 minus geographical constraints using optimized content.
Potential tactics include:
- Search ads on Google and Bing targeting buyers of related building services near firm office locations.
- Facebook/Instagram ads highlighting impressive past projects with video walkthroughs and tagline captions.
- Launching YouTube channel tutorials guiding homeowners through design processes from concept sketches to final construction.
- Email newsletter campaigns sent to subscribers and past inquiry leads announcing recently completed works.
- Guest blog posts for industry trade publications discussing architecture techniques or innovations.
Despite digital dominance, traditional physical marketing still holds relevance for architecture depending on regional demographics.
Tactics incorporating firm branding include:
- Sponsoring local chamber of commerce networking events, university architecture programs, conferences, or real estate conventions to meet stakeholders.
- Running special offer coupons in community newsletters, apartment guide magazines, or industry trade publications.
- Direct mail postcards showcasing past civic or commercial projects with project manager contact info mailed to targeted developing neighborhoods.
- Eye-catching large format billboards or radio spots advertising services in zones with planned new constructions announced.
- Hosting pop-up miniature model galleries or meet-the-architect happy hours at co-working spaces near target client office towers.
Architecture firms can go far with traditional marketing techniques. Digital channels cast wider nets engaging prospective leads more passively over time as well. Using both is essential to successfully draw in potential clients.
14. Focus on the Customer
Providing an incredible client experience throughout the design process and construction differentiates thriving architecture firms from counterparts struggling to stay afloat. How architects make customers feel proves equally as important as technical aptitudes in drafting eye-catching plans.
Consider that each sizable commercial project often engages multiple stakeholders from developers, corporate owners, and contractors. Exceeding expectations at each phase positions firms to organically win future work as pleased clients expand portfolios.
Similarly, refined homebuilders working closely with architects on custom residential properties may jointly craft promotional case studies as portfolio pieces if the process runs smoothly. Displaying these referenceable works can sway other developers’ shopping services.
Maintaining clear communication, meeting deadlines, and promptly responding to inquiries also reduce client frustrations that lose business. If developers sense lags, oversights, or reworks stemming from architecture mismanagement, replacements get considered for future works.
Essentially architects thrive based on capabilities to not just design aesthetically stunning spaces, but also to expertly guide clients through complex journeys that heighten confidence in their vision and leadership. Satisfied customers eagerly reward those diligently serving their ever-evolving needs across projects.